April 2013

British Airways received a major boost today when the UK regulator, the CAA, announced its recommendation that passenger charges at Heathrow should rise by the rate of inflation minus 1.3% for the five year period commencing April 2014. At current prices, that would mean a real term reduction from £20.50 per passenger now to £19.34 per passenger in 2019.

Heathrow Terminal 5

Heathrow Terminal 5

In February, Heathrow had proposed that its charges should increase by 5.9% above inflation for each of the same 5 years and, although in private it probably never expected such a generous settlement, it will still have been shocked by today’s report. While Heathrow has argued that it needs to increase its charges in order to continue investing in the airport, the airlines and CAA have taken a somewhat contrary view; with Terminal 5 having opened in 2008, and Terminal 2 set to re-open in 2014 after a complete re-build, the major capital investment projects at Heathrow will have come to an end and so, the likes of British Airways argue, any increase in charges would simply be an excuse for the airport’s investors to line their pockets - this at a time when airlines around the world are struggling to make any profit at all.

Willie Walsh

Willie Walsh

When Heathrow proposed its 5.9% annual increase in charges, British Airways had countered with an (equally unrealistic) proposal for an annual reduction of 9.8% below inflation. Reacting to today’s news, Willie Walsh, CEO of British Airways parent company IAG had this to say: “Heathrow airport is over-priced, over-rewarded and  inefficient and these proposals, which will result in an increase in prices,  fail to address this situation. In the past the CAA has rewarded Heathrow for inefficiency and it is now the most expensive hub airport in the world.  Its charges have tripled in the last 11 years with inflation busting increases year-on-year”.  Nothing new there then although we are pretty confident that Willie Walsh will be happier than his counterpart at Heathrow, Colin Matthews.


At the same time as publishing its proposals for Heathrow, the CAA also announced that it planned to adopt a lighter touch in regards to charges at London’s 2 other major airports, Gatwick & Stansted. Both airports were once part of BAA, the original parent company of Heathrow, and were forcibly sold off in order to introduce competition to the capital’s airport industry.

 

The bridge at Gatwick Airport North Terminal

London Gatwick

Although British Airways has never flown out of Stansted (unless one counts its old low cost off-shoot, Go) it does still have a significant presence at Gatwick. There, the CAA has said that it wishes to see a more flexible regime that will allow the airport to compete with Heathrow on commercial terms. Thus far however, no agreement has been reached and, should that continue to be the case, the CAA has advised that charges at Gatwick will rise by 1% above inflation for the same 5 year period.

A final announcement on charges at all 3 airports is expected in October.

British Airways Heathrow

 

 

British Airways In-Flight entertainment offers passengers on its long-haul flights a wide variety of audio and visual programs to choose from.

For those passengers travelling in May, the selection includes hit movies such as The Gangster Squad, The Guilt Trip, Broken City, The Look of Love and Oz – The Great & Powerful. In addition to a wide range of movies there is also a great selection of tv programing including the ever popular ’An Idiot Abroad’, the highly acclaimed Rolling Stones documentary ‘Crossfire Hurricane’ and hit US drama ‘Revolution’

 


 

British Airways seems set to gain a valuable additional slot at Heathrow after Irish carrier Aer Lingus wrote to its shareholders asking for permission to transfer the slot for an “agreed consideration”.

British Airways aircraft parked in front of Heathrow Terminal 5The slot in question is for a departure from Heathrow at 06:50 in the morning with an arrival back in London at 22:00. While Aer Lingus has stated that it cannot make money from the slot, British Airways, with its far greater range of destinations and aircraft, will easily be able to incorporate the slot into its schedule and, more than likely, add a new long-haul destination. While these particular slot timings would seem to preclude flights to the Far East, British Airways could use them to launch new or additional services to the east coast of the USA or even West Africa.


Aer LingusSlots at Heathrow are politically sensitive for Aer Lingus as, traditionally, they have been seen as a means of ensuring connectivity to London, the world’s leading financial and aviation centre. However, with the growth in importance of the Gulf states, and increased direct flights from Dublin to Dubai & Abu Dhabi, these links to London are perhaps not quite as important as they once were.

With Heathrow operating at just under 99% of available capacity, the only way that airlines can increase services at the airport is through a takeover of another airline (as with British Airways takeover of bmi in 2012) or by purchasing slots from another carrier. As airline takeovers are incredibly difficult (and near impossible between European and Non-European airlines) purchasing slots is pretty much the only genuine option. In 2008, following the Open Skies agreement between the US & EU, it is rumoured that Continental Airlines paid over $200 million for prime time slots at Heathrow. It is unlikely that British Airways will pay even a fraction of that amount to Aer Lingus however.

British Airways Terminal 5 Check-In

It was back in March that we first brought up the subject of UnGrounded, a British Airways innovation bringing together 100 tech luminaries on a flight from California to London. Rather than just flying them to yet another conference, the novel idea of UnGrouded is to use the flight itself as a temporary “innovation lab in the sky” during which the various company owners, funders, innovators, academics and journalists can get together and discuss ways of connecting what they do, and what they can do in the future, with the needs and aspirations of less developed parts of the world.


As Britsh Airways work towards the first such UnGrounded flight later in June, they have released this video featuring contributions from just a few of those involved.

Last week, British Airways first A380 completed its paint-job in Hamburg, Germany. Now the airline have released a video about the work involved in painting the world’s largest passenger aircraft.

British Airways has 12 A380s on order with the first aircraft set to be delivered some time this July. For the first few months the aircraft will be used on short-haul flights (routes have not been announced but we expect them to include Paris, Madrid & Frankfurt) so as to fully familiarise British Airways crew, both in the air and on the ground, with the aircraft. The first formal, scheduled flight of the new A380 will then be on 15th October, operating the ‘Red Carpet Route’ between Heathrow & Los Angeles. Following that, in November, the second destination to receive British Airways A380 will be Hong Kong.